Changes from plenary report to adopted text

The European Parliament,

– having regard to the Treaty on the Functioning of the European Union (TFEU),

– having regard to Title V of the Treaty on European Union, in particular Chapter 2, Section 2 thereof on the common security and defence policy,

– having regard to the white paper entitled ‘White Paper for European Defence – Readiness 2030’, presented by the Commission and the High Representative for the Union for Foreign Affairs and Security Policy on 19 March 2025, and its five-pillar financing plan entitled ‘ReArm Europe’,

– having regard to the joint communication from the Commission and the High Representative of the Union for Foreign Affairs and Security Policy of 18 May 2022 on the Defence Investment Gaps Analysis and Way Forward (JOIN(2022)0024),

– having regard to the study published on 11 January 2024 entitled ‘Access to equity financing for European defence SMEs’,

– having regard to the report of 9 September 2024 by Mario Draghi on the future of European competitiveness (Draghi report),

– having regard to the European Investment Bank (EIB) Activity Report 2024,

– having regard to its position at first reading of 25 November 2025 on the proposal for a regulation of the European Parliament and of the Council establishing the European Defence Industry Programme and a framework of measures to ensure the timely availability and supply of defence products,

– having regard to the joint communiqué issued on 6 June 2025 by France, Germany, Spain, Estonia, Luxembourg, the Netherlands and Portugal on the launch of the ‘Finance Europe’ label,

– having regard to the Commission communication of 17 June 2025 on the Defence Readiness Omnibus (COM(2025)0820), aimed at simplifying the relevant legal and administrative frameworks to strengthen the EU’s defence readiness,

– having regard to the 10th progress report of June 2025 on the implementation of the common set of proposals endorsed by EU and NATO Councils on 6 December 2016 and 5 December 2017,

– having regard to Council Regulation (EU) 2025/1106 of 27 May 2025 establishing the Security Action for Europe (SAFE) through the Reinforcement of the European Defence Industry Instrument,

– having regard to the report of 10 April 2024 by Enrico Letta on the future of the European single market (Letta report),

– having regard to its resolution of 12 March 2025 on the white paper on the future of European defence,

– having regard to its resolution of 8 July 2025 on the financial activities of the European Investment Bank – annual report 2024,

– having regard to the Commission notice of 28 August 2025 on the application of the sustainable finance framework and the Corporate Sustainability Due Diligence Directive to the defence sector (C(2025)3800),

– having regard to the opinions of the Committee on Economic and Monetary Affairs, the Committee on Industry, Research and Energy, and the Committee on Budgets,

– having regard to Rule 55 of its Rules of Procedure,

I. whereas small and medium-sized enterprises (SMEs) represent a vital component of the EDTIB, providing innovation, flexibility and resilience across the entire value chain; whereas the Commission’s 2024 study on access to equity financing highlights, however, that SMEs in the EDTIB face greater difficulties than those in other sectors in obtaining credit and equity financing because of: (i) irregular public procurement and payment delays between subcontractors, which reduce cash flow visibility, (ii) the exclusion of defence activities by some investors for image reasons, and (iii) limited exit opportunities for defence assets on European capital markets; whereas addressing such financing obstacles is essential to give defence-related SMEs fair access to capital markets and private investment, thus improving competitiveness and economic resilience;

J. whereas additional financing needs for the EDTIB for the 2025-2030 period are estimated, at a minimum, at EUR 30 billion to EUR 40 billion, of which EUR 6 billion to EUR 18 billion is estimated to be met through equity; whereas this highlights the relevance of the EU’s savings and investments union (SIU) in mobilising long-term private capital and attracting institutional investors;

K. whereas the defence sector remains highly fragmented, structured around major buyers, fragile subcontracting chains and underdeveloped pan-European value chains, limiting the cash flow of small businesses, which are often forced to finance their working capital requirements with long-term resources; whereas this hampers the strengthening of the EDTIB, which is essential for building up defence capabilities;

L. whereas the EIB prioritised the security and defence sector, adapted its lending criteria and internal processes and created a one-stop shop for financial support on security and defence, namely its Security and Defence Office; whereas the EIB mobilised nearly EUR 1 billion in 2024 and was aiming to mobilise EUR 2 billion in 2025 but has actually already reached EUR 3 billion; whereas it has already allocated EUR 13 billion to defence since 2017 and plans to allocate an additional EUR 6 billion by 2027, while expanding its activities to include dual-use projects and new financial instruments; whereas improving access to EIB instruments for SMEs and mid-caps in the defence and security ecosystem is key to ensuring inclusive and innovative growth across the EU;

M. whereas the EIB plays a key role in promoting economic cohesion, sustainable development and competitiveness in the EU; whereas the establishment of a defence, security and resilience bank was proposed in the white paper on the future of European defence; whereas formally extending the EIB’s mandate to include support for the EDTIB would be a more effective and proportionate solution than creating a new defence, security and resilience bank;

N. whereas any extension of the EIB’s lending policy and eligibility criteria to include defence-related equipment must be assessed against the need to preserve the EIB’s financial stability and its AAA credit rating, which remain essential safeguards for its ability to deliver on EU policy priorities, including defence readiness and the EU’s overall political independence;

O. whereas in 2023, approximately 39 notified foreign direct investment (FDI) cases underwent an in-depth review under the EU FDI screening cooperation mechanism, with the defence and aeronautics sectors being particularly affected;

P. whereas despite the establishment of specialised funds in Europe, only around 30 European funds specialising in defence existed in 2024, of which four had assets exceeding EUR 500 million, compared with more than 50 such funds in the United States, including 30 of that size, and this situation leads to a less attractive secondary market, lower valuations during exit transactions and a risk of takeover by foreign investors;

Q. whereas the deteriorating security environment and growing hybrid and conventional threats throughout the EU underscore the need for sustained investment in defence readiness, resilience and military mobility; whereas the eastern flank constitutes a strategic area for Europe’s overall security, requiring enhanced infrastructure, surveillance capabilities and rapid reinforcement mechanisms; whereas strengthening border management, improving counter-drone and air defence systems, and developing regional industrial capacities for defence production and innovation are essential to ensure the EU’s preparedness; whereas these measures, including the implementation of key initiatives such as the European Drone Defence Initiative, the Eastern Flank Watch, the European Air Shield and the European Space Shield, should be supported by adequate EU funding; whereas such efforts are crucial to protect the most exposed Member States, preserve the EU’s territorial integrity and uphold collective deterrence and stability across the continent;

Providing a stable foundation and long-term vision for private defence investment

Supporting and better directing Member States’ public investment in defence

1. Believes that the time has come for a renewed political commitment to make the EU a credible security provider by strengthening its defence readiness through fostering deeper cooperation among Member States, their armed forces and industries; calls on the Member States to pool efforts to achieve a coherent, ambitious and integrated European framework for defence; underlines, in this context, the need for the Commission and the Member States to prepare emergency procedures for projects established in response to major crises or wars, including faster allocation of public funds and private capital, as an integral element in ensuring readiness and the EU’s capacity to respond rapidly and effectively to emerging security threats;

2. Expresses concern that, despite the objectives of the ReArm Europe plan, by the end of July 2025 only 10 out of 27 Member States had announced a clear target to increase their defence spending to at least 3 % of GDP by 2030; calls on each Member State to draw up a detailed strategic vision for its military expenditure up to 2030, with a clear division between hard defence capabilities and dual-use infrastructure, including capability milestones, stockpile metrics, SME participation figures, and a target for the share of collaborative procurement; stresses the need for national defence budgets to close capability gaps, restore deterrence and ensure adequate support for Ukraine; underlines that future investment must prioritise cooperation, interoperability and joint procurement, making EU-level collaboration the norm within the European defence industrial sector; stresses, in this regard, the need to align Readiness 2030 with the concrete numerical targets set out in the European defence industrial strategy (EDIS), in particular by ensuring that at least 40 % of defence equipment is procured jointly by 2030, that at least 35 % of defence trade is intra-EU trade by 2030, and that at least 50 % of defence procurement is of EU-made products by 2030, and 60 % by 2035; commends those Member States that consistently allocate more than 3 % of GDP to defence; recalls that the Member States should regularly update their capability targets and military doctrines to address new and emerging threats;

3. Acknowledges the stark deterioration in the EU’s security context, resulting in growing threats to the EU’s external borders; calls, consequently, for the EU and its Member States to adopt a comprehensive approach to defence, recognising that security extends beyond military assets and also encompasses defence against hybrid threats; stresses that internal political stability is a prerequisite for credible military strength, and that without citizens’ trust in institutions and democracy, the EU’s overall security and cohesion would remain fragile; calls for the swift and solidarity-based mobilisation of EU financial support, in particular for those Member States most exposed to conventional military threats;

4. Welcomes the proposals set out in the ReArm Europe plan to offer Member States greater budgetary flexibility and to encourage increased defence spending in order to strengthen the EDTIB; notes, in particular, the loan facility under the EUR 150 billion SAFE instrument and that 19 Member States will make use of SAFE loans; regrets, however, that the Commission has based this instrument on Article 122 TFEU, thereby ruling out consultation with Parliament, which prevents monitoring and control of the funds and risks exacerbating disparities between Member States; stresses its function of budgetary control in line with Article 314 TFEU and, therefore, calls strongly on the Commission to refrain from applying Article 122 to any other initiative related to the defence industry, or to other issues related to defence financing in the future; considers, in this regard, that it is crucial for projects under SAFE to reflect the EU’s capability priorities as identified in the white paper on European defence, the capability development plan and the Defence Readiness Roadmap 2030; regrets, however, the fact that procurements carried out by one Member State are eligible for support under SAFE, where a procurement contract is signed no later than 30 May 2026, since this fails to incentivise common procurement and market defragmentation, and ultimately risks exacerbating disparities between Member States; stresses, in this regard, that financing should also be based on facilitated access to private capital, national contributions, existing budgetary margins or alternative mechanisms that ensure fiscal responsibility; calls on the Commission, to that end, to promote multi-year block purchases to lower unit costs and reduce the fragmentation of weapon systems currently in use across the EU;

5. Notes that Europe’s defence ecosystem remains fragmented across industrial, financial and governance dimensions; stresses that the EU budget remains an effective instrument to improve integrated planning, stable long-term financing and effective implementation in the area of defence, thereby overcoming that fragmentation; reiterates that increased national defence budgets should be accompanied by increased coordination and joint action at EU level; recalls the importance of ensuring broad support for public investment in defence and thus the need for a fair distribution of the costs; regrets the lack of a strong EU preference clause in the ReArm Europe plan, especially regarding the SAFE instrument, which would reinforce the EDTIB, create new jobs in the EU, increase the interoperability and interchangeability of defence products in the EU and reduce dependence on non-EU countries, thus strengthening Europe’s deterrence and increasing its security of supply; stresses that, for the SAFE instrument to be financially efficient, it should primarily be a vehicle for jointly procuring, maintaining and operating strategic enablers, especially those providing intelligence surveillance and reconnaissance; calls on the Commission to use its role fully, in particular through the SAFE task force, to ensure that Member States’ national defence plans respect SAFE’s objective of promoting joint procurement to address capability gaps efficiently and to use all available instruments, including European Defence Projects of Common Interest and the Structure for European Armament Programme;

6. Observes the limited and uneven use of the national escape clause and notes that, despite such flexibility, several Member States continue to face constraints in their fiscal capacity to meet the demands and respond effectively to shared priorities, and that other Member States have refrained from applying for the national escape clause out of concern about the financial markets’ reaction; recognises that the national escape clause is a temporary instrument for country-specific emergencies, while sustained investment planning requires long-term predictability; highlights the fact that predictable fiscal and regulatory conditions are essential to attract private investment and to ensure the efficient use of public resources across the EU; believes that this framework, where appropriate, should be strengthened by EU-level investment instruments and tools designed to minimise the cost for EU taxpayers and maximise efficiency in the provision of EU public goods;

7. Welcomes the Commission’s proposals to simplify, facilitate and speed up defence procurement; calls for the strengthening of the EU preference principle, ensuring that beneficiaries have the ability to decide on the definition, adaptation and evolution of designs and systems throughout their life cycles, and that no component is sourced from non-EU countries or entities that contravene the security and defence interests of the EU and its Member States; calls, furthermore, for the eligibility criteria under the ReArm Europe plan to be fully aligned with those set out in the European defence industry programme (EDIP), in order to reduce fragmentation, save costs and increase efficiency, foster interoperability and interchangeability, and boost the competitiveness of the EDTIB; stresses that procurement and participation rules should be proportionate and SME-friendly and calls for the introduction of a minimum mandatory share of project value to be allocated to SME participation in the supply chain, ensuring equal access for start-ups and smaller suppliers alongside prime contractors, and avoiding administrative burdens that deter SME participation; calls, moreover, for European supply chain resilience to be strengthened by promoting common standards and mixed supply chains that reduce critical dependencies; acknowledges the need for strong transatlantic cooperation as a foundation for European defence but raises concern over the announcement of a substantial increase in the procurement of defence products from the United States, as this will counteract the ambition defined in EDIS and causes uncertainty for investment in the EDTIB; calls for transatlantic defence industrial cooperation based on a level playing field that will benefit both sides; underlines that participation in EU defence programmes must be fully consistent with the EU’s fundamental values, security interests and the objectives of the common foreign and security policy (CFSP) and the common security and defence policy (CSDP);

8. Underlines that the EU defence industry needs predictable, multi-year demand and common requirements to deliver speed, scale and value; stresses that interoperability and standardisation must be embedded from the outset in defence procurement and investment in the EU, via joint testing and certification, and cross-border acceptance, in order to curb variant proliferation and market fragmentation, in line with the Draghi, Letta and Niinistö reports; encourages Member States to complement their budgetary commitments with transparent medium-term defence investment outlooks covering capability targets, procurement timetables and the share of spending earmarked for cooperative programmes; invites the EDA to compile these national outlooks into an annual comparative overview to facilitate coordination and identify opportunities for joint projects;

9. Stresses the need to strengthen the EDTIB by aggregating demand, simplifying and harmonising the rules, and promoting open and fair competition among European industries, resulting in a more cost-effective and more competitive European defence industry and improved access to defence equipment across the EU; regrets the lack of comprehensive data on EU collaborative equipment procurement, making it impossible to provide a comprehensive analysis of EU collaborative procurement of defence equipment and to adequately assess the state of the EU defence landscape in this area; urges the Commission and the Council to address persistent obstacles to intra-EU trade in defence products, including licensing and certification barriers, and calls on the co-legislators to prioritise the adoption and effective implementation of the Commission’s defence omnibus proposal to streamline transfers and procurement across the EU in support of a more resilient and competitive EDTIB;

10. Underlines that synergies with civilian innovation programmes such as Horizon Europe and the European Innovation Council should be strengthened to maximise impact and avoid duplication; stresses, at the same time, that technological progress must be matched by the necessary human capabilities; expresses concern that the number of active personnel grew only marginally in 2024 and warns that rising investment without parallel recruitment and retention efforts risks creating capability gaps in operating and maintaining new equipment; calls on the Member States to prioritise recruitment and retention policies in the defence sector, including EU-supported exchange and training programmes, to ensure that increased spending translates into real operational readiness;

Adapting the EU budget and financing tools to meet security challenges and the needs of businesses

11. Repeats its previous calls on the Commission to explore all options to support Member States’ defence investment and to maximise the synergies in existing mechanisms to support the EU’s defence readiness; recalls its call to ensure that the next MFF supports a comprehensive security approach through adequate and coordinated investment; welcomes the consolidation of the defence envelope proposed in the 2028-2034 MFF; regrets, however, that the Commission did not provide a sufficiently detailed breakdown of this envelope in its proposal for the 2028-2034 MFF; recalls that a detailed budgetary breakdown is necessary to enable the budgetary authority to take meaningful and informed decisions; stresses that commensurate EU-level investment in defence in the next MFF, underpinned by transparent governance, can reduce duplication, deliver economies of scale, and enhance interoperability; recalls the specific nature of the defence sector, and considers that the next MFF must retain all the criteria and procedures of the financing instruments of the European defence industry, in particular the criteria relating to the European Defence Fund and EDIP;